What does a "denial" mean in billing terms?

In billing terms, a "denial" specifically refers to a situation where the payor, such as an insurance company, refuses to pay a claim submitted for reimbursement. This can occur for various reasons, such as the service not being covered under the patient’s policy, incorrect coding, lack of pre-authorization when necessary, or the claim being submitted after the allowable time frame.

Understanding that a denial represents the payor's decision is crucial for billing professionals, as it reflects the need for follow-up actions, such as appealing the denial or correcting and resubmitting the claim. Recognizing and addressing denials promptly is a significant part of revenue cycle management, ensuring that the provider receives the appropriate reimbursement for the services delivered.